Paying car tax by direct debit: monthly costs and rules

You can pay car tax by Direct Debit every year, every 6 months or every month. Paying yearly costs the same as paying by card. Paying monthly or every 6 months adds a 5% surcharge. The Direct Debit renews by itself each year, so you do not get a reminder letter, and it stops for good when you sell the car. A new keeper always sets up their own.

Here is how it works, what it costs in the 2026/27 tax year, and what to do if a payment fails.

The three ways to pay by Direct Debit

When you tax a car online or at a Post Office, you can choose:

• every year: one payment, no surcharge
• every 6 months: two payments, 5% surcharge
• every month: twelve payments, 5% surcharge

You can also pay for 12 months or 6 months in one go by debit or credit card. A single 6 month payment by card carries a 10% surcharge, so 6 monthly by Direct Debit is cheaper than by card.

You cannot set up a Direct Debit over the phone. Use the online service or a Post Office.

What it costs in 2026/27

Using the standard rate for cars first registered from 1 April 2017 as an example, the GOV.UK rate tables give these amounts from 1 April 2026:

So paying the £200 standard rate monthly costs £10 more over the year. On a car with the supplement, it costs £32 more.

The same 5% applies to the older systems. A band A car registered from 1 March 2001 to 31 March 2017 pays £20 for 12 months, or £21 in total by monthly Direct Debit. See car tax bands by CO2 for every band, or use the car tax calculator.

Setting it up

You need:

• your address and date of birth
• your bank or building society name, account number and sort code
• a reference number from the V5C log book (in your name), a tax reminder letter, or the green new keeper slip if you have just bought the car

You do not have to be the registered keeper to set up the Direct Debit. Emails and letters about the payments go to the account holder. You cannot use an account that needs two signatures.

The first payment is not taken until the tax has started, and it can take up to 10 days. You can use the car before the first payment is taken. After that, payments are taken on the first working day of the month they are due. You cannot choose a different date.

Renewal is automatic

A Direct Debit for vehicle tax renews by itself when it is due to run out. DVLA tells you by email or letter when payments will be taken, and you do not get the usual V11 reminder letter.

Two things can stop renewal:

• No keeper on record. The keeper must have a V5C before the tax is renewed. If DVLA has no keeper on record, the Direct Debit will not renew.
• MOT running out. If the MOT will have expired when the tax is due to renew, DVLA writes to you. Once the car passes an MOT, the record updates and the tax renews on the date it was due. If you do not get an MOT in time, you have to tax the car again.

When a payment fails

If a payment fails because there is not enough money in the account, the account holder gets an email. DVLA tries again within 4 working days. If the second attempt also fails:

1. the Direct Debit is permanently cancelled
2. the car is no longer taxed

You then have to tax the car again with the V5C, either with a new Direct Debit from an account with enough money in it, or another payment method such as a debit card. It is illegal to drive the car until you have.

If you do nothing, GOV.UK says you can be fined £80 and have to pay for the time the car was untaxed. An unpaid fine can lead to the car being clamped or crushed, or the debt passed to a collection agency.

Changing how often you pay

You cannot switch from 6 monthly to monthly, or the other way, on the same Direct Debit. You have to cancel it with your bank and tax the car again. You can keep driving until the date your next payment was due, and you should tax the car again on the first day of that month.

If you move bank, most UK banks move the Direct Debit for you.

When you sell the car

DVLA cancels the Direct Debit automatically when you tell them the car has been sold or transferred, taken off the road with a SORN, written off, scrapped, stolen or exported. You get a refund cheque for any full months left. If you tell DVLA just before a monthly payment is due, the payment may still be taken, and DVLA refunds it within 10 working days.

The 5% surcharge you paid is not refunded. See car tax refunds.

The Direct Debit does not pass to the buyer

A Direct Debit is tied to the keeper and the bank account, not the car. When a car is sold, the seller's Direct Debit stops and the buyer must tax the car before driving it. If you are buying, set up your own Direct Debit with the new keeper slip. Our guide does car tax transfer covers this step by step.

Frequently asked questions

Is it more expensive to pay car tax monthly?

Yes. Paying monthly or every 6 months by Direct Debit adds a 5% surcharge. For the £200 standard rate in 2026/27, 12 monthly payments total £210.

When is car tax taken by Direct Debit?

On the first working day of the month the payment is due. You cannot choose a different date. The first payment is not taken until the tax has started, and it can take up to 10 days.

What happens if my car tax Direct Debit fails?

DVLA emails the account holder and tries again within 4 working days. If that fails too, the Direct Debit is cancelled and the car is no longer taxed, so you must tax it again before driving.

Does a car tax Direct Debit transfer to a new owner?

No. It is cancelled when DVLA is told the car has been sold. The new keeper sets up their own.

Do I get a reminder when my Direct Debit renews?

You do not get the V11 reminder letter. DVLA sends an email or letter telling you when the payments will be taken.